Google Inc.

Submitted by:-

Rudraksh bansal & Kartik bhardwaj Section: FH1

HISTORY

The history of Google dates back to the mid-90s when Stanford University's graduate

students Sergey Brin and Larry Page collaborated to develop technology for a search

engine. Mr. Brin and Mr. Page began collaboration on a search engine called BackRub,

named for its unique ability to analyze the back links pointing to a given website in 1996.

Two years later, Mr. Brin and Mr. Page raised $1 million in funding from private

investors and venture firms to start Google.

Google was incorporated in 1998. It initially answered 10,000 search queries per day. By

the end of 1998, PC Magazine named Google one of its Top 100 Web Sites and Search

Engines for 1998. Google moved its headquarters to University Avenue in Palo Alto,

California in the beginning of 1999. By this time, the company was answering 500,000

search queries per day. It received $25 million in equity funding from Sequoia Capital

and Kleiner Perkins Caufield & Byers. Also during this period, AOL/Netscape

incorporated Google's search technology into its Netcenter portal. Later that year, Google

once again moved its headquarters to Mountain View, California. Google was also

chosen by Virgilio, a major Italian online portal to provide Google WebSearch services in

Italy.

The broad appeal of Google search became apparent when the site was awarded both a

Webby Award and a People's Voice Award for technical achievement in 2000. Google

also forged partnerships with Yahoo, Chinese portal NetEase and NEC's Biglobe portal in

Japan. To extend its keyword-targeted advertising to smaller businesses, Google

introduced AdWords, a self-service ad program that could be activated online with a

credit card. And in late 2000, to enhance users' power to search from anywhere on the

web, Google introduced the Google Toolbar. It also introduced the first wireless search

technology for WAP phones and handheld devices. By late 2000, the company answered

more than 60 million searches per day. Its index comprised more than 1.3 billion web

pages.

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Google acquired Deja.com's Usenet archive in 2001. It also released a wireless search

technology specifically designed for i-mode mobile phones in Japan. An agreement with

Lycos Korea brought Google search to a new group of Asian internet users. Google

formed a partnership with Universo Online, which made Google Latin America's premier

search engine.

Google also launched its comparison online shopping service, Froogle, and news feeds,

Google News. The company acquired Pyra Labs in 2003, which helped Google launch

Blogger in the same year. Furthermore, the Google AdSense program was launched in

the same year. Google announced plans to offer an e-mail service called Gmail in

2004.The company also unveiled its plans for an initial public offering (IPO) of its stock

through an online auction to raise around $2.7 billion. The company's IPO on the

NASDAQ Stock Exchange took place in August 2004. Google acquired Picasa, a

California-based digital photo management company, in mid-2004. Google's desktop

search, a beta based web application, was launched later in 2004. At the same time, AOL

Europe and Google announced a multi-year alliance providing the UK, France and

Germany users access to Google's targeted advertisement.

Google subsequently acquired Keyhole, a digital and satellite mapping company.

Towards the end of 2004, the company launched Google Groups and Google Print. It also

announced agreements with the libraries of Harvard, Stanford, the University of

Michigan, and the University of Oxford, and The New York Public Library to digitally

scan books from their collections so that users worldwide can search them through

Google. Picasa 2, a free photo management software, was launched in January 2005. It

also launched Google Video, Google Maps and Google Web Accelerator. Google Earth,

a satellite imagery based mapping software that combines 3D building and terrain

mapping capability with Google search, was launched in June 2005. The company also

launched Google Sitemaps, Google Talk, Google Desktop and Google Blog Search

during the same period. NASA and Google signed a memorandum of understanding

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(MOU) in July 2005 that outlines plans for cooperation on a variety of areas, including

large-scale data management, massively distributed.

FUTURE OUTLOOK

Shortly after the founders of Google developed the PageRank algorithm in 1997, the beta

version of their search engine at Stanford University, California was quickly enjoying

enormous popularity. The search engine was just better than everything known so far.

The number of enthusiastic users rapidly increases. PageRank ranks websites by their

relevance on the incoming links.

Today, Google offers its search function in more than 100 languages. In addition they

offer a constantly growing list of currently over 80 free features. Suing these services

users reveal more and more private information, parts of which are then accessible over

the Google search engine.

From the beginning money was not important to the founders of the Google; they wanted

to make the world a better place to anybody. In this point of the movie we have the first

skepticism towards Google: the whole information will be controlled by Google.

Gmail, Googles free email service today offers nearly 3GB mail storage, so you’ll never

need to delete another message. This huge data storage is financed by advertising. All

incoming and outgoing mails are scoured for certain keywords to display content related

ads next to the emails. Thus Google knows the entire contents of the mails of its users

and is able to even sort them by keywords.

Google is also collecting user-data in other ways. The Google homepage for example sets

a cookie on the client-computer which is valid until the year 2038.

Using all these data, Google could easily create very detailed profiles on its users. Google

is denying this, but some facts actually point to this intention. With a court proceeding,

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Google officially restraints against the delivery of user information to the US government

for the purpose of reaserch. However, the former CIA agent Robert David Steele speaks

about cooperation between Google and the CIA. He even claims that Google at its

beginning received money from the CIA.

Google’s turnover speaks an own language: Google is the biggest existing provider for

online services. But long since, Google has also reached the offline market. In North

America, Google already provides advertising to magazines, newspapers and radio

stations.

Google is cooperating with the leading molecular scientist Dr. Craig Ventor, who

profoundly participated in the decoding the human genome. Google is able to contribute

enormous computing power as well as the required data storage for this work-more, than

the government could ever provide. Dr. Craig Venter claims that Google could soon start

a service anybody would be able to check its own hereditary faults or disease. This way,

Google even gets an insight in its user’s genes.

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OBJECTIVES

To understand the business model of Google Inc. services & In the Electronic commerce

market understand the strengths and weakness of the company.

Another objective is to predict the future of the company.

MISSION STATEMENT

Google's mission is to organize the world's information and make it universally

accessible and useful.

VISION STATEMENT

The HR department, in its alignment with the business strategy is trying to attract the best

minds across the globe to work for Google, has always aimed to become the strategic

partner to the business operation.

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COMPANY OVERVIEW

Worldwide, Google holds a market share of 44.1%, the biggest rival Yahoo! Comes on

28.7% and the Microsoft search engine MSN merely on 12.5% even more distinct are the

numbers in the Germany, With a market share just 90% Google outclasses the

international competitors.

Google is a global technology leader focused on improving the ways people connect with

information. Google maintains an index of websites and other content, and makes this

information freely available to anyone with an Internet connection. Its automated search

technology enables people to obtain nearly instant access to relevant information from its

online index. The company’s innovations in web search and advertising have made its

web site a top internet destination and its brand one of the most recognized in the world.

The company, primarily, operates in the US. It is headquartered in Mountain View,

California and employs approximately 10,700 people.

The company recorded revenues of $10,604.9 million during the fiscal year ended

December 2006, an increase of 72.8% over 2005. The operating profit of the company

was $3,550 million during fiscal year 2006, an increase of 76% over 2005. The net profit

was $3,077.4 million in fiscal year 2006, as compared to $1,465.4 million in 2005.

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BUSINESS OVERVIEW

From the beginning, Google has been working on technology that can improve on

existing ways of doing business. It provides a variety of services and tools for advertisers

of all sizes, from simple text ads to display and mobile advertising, and to publishers,

whether small or large.

Not only are these programs the backbone of our company; they’ve also enabled entrepreneurs and publishers around the world to grow their businesses and become successful. Google succeeds when the tools that have been built are useful to its users, advertisers and other partners. And of course, the root of its business is to provide useful and relevant information to the millions of people around the world who rely on Google search to provide the answers they are seeking.

SEARCH ADVERTISING

Since its first advertising program, Ad Words, was introduced in 2000, its goal has been

to show people ads that are so useful and relevant that they are a form of information in

their own right. With Ad Words, advertisers create simple text ads that then appear beside

related search results as well as one of thousands of partner sites. Advertisers select their

own target keywords and only pay when customers click on their ads. It‘s easy to create

ad text and manage online advertising accounts with no large upfront payment required.

Google also provide tools for advertisers to measure and improve the effectiveness of

their ads in order to maximize their profits as well as continually improve the ads that

people see on Google. As the search advertising business continues to evolve worldwide,

we’re exploring new formats, such as for mobile devices that will make ads even more

relevant for everyone.

MOBILE ADVERTISING

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Driven by the growth of smart phones with full WebKit browsers, mobile devices will

soon overtake PCs as the primary way people around the world access the web. We offer

advertisers the ability to run search ad campaigns on mobile devices with popular mobile-

specific ad formats, such as click-to-call ads (advertisers can include a phone number

within ad text).

DISPLAY ADVERTISING

As the Internet ecosystem has evolved, so too have ad formats. Today Google deeply

invested in display advertising, which it believes is an area of significant future growth

not only for Google, but for online publishers. Its aim is to simplify display advertising so

it’s easier for advertisers and publishers to manage campaigns across different formats,

on different websites and for different devices

LOCAL

Google’s free easy-to-use tools help local business owners manage their presence on the

web and grow their services.  Any business can use its online local database

called Google Places to add a new listing or edit an existing one. These listings appear for

free when potential customers search for products, services and businesses on

Google.com or Google Maps.

ENTERPRISE

Today more than 3 million businesses, from mom-and-pops to big corporations, use

Google Apps—which includes email, documents, calendars and more—to communicate

and collaborate in the workplace. Its apps are constantly updated, so IT departments and

employees don’t have to deal with new versions and installations, thereby reducing

overall costs. Further, we believe Google Apps can be more secure than traditional

applications: Companies don’t need to manage software security patches because we take

care of that. Google Apps is the first cloud computing suite of message and collaboration

tools to receive U.S. government security certification.

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BUSINESS PHILOSOPHY OF GOOGLE

“The perfect search engine,” says co-founder Larry Page, “would understand exactly

what you mean and give back exactly what you want.” Technology has come a long way

since it came into existence and the face of the web has changed. Recognizing that search

is a problem that will never be solved, we continue to push the limits of existing

technology to provide a fast, accurate and easy-to-use service that anyone seeking

information can access either on their desktop or mobile phone.

As we keep looking towards the future, these core principles guide our actions.

1. Focus on the user and all else will follow.

2. It’s best to do one thing really, really well.

3. Fast is better than slow.

4. Democracy on the web works.

5. You don’t need to be at your desk to need an answer.

6. You can make money without doing evil.

7. There’s always more information out there.

8. The need for information crosses all borders.

9. You can be serious without a suit.

10. Great just isn’t good enough.

Even if you don’t know exactly what you’re looking for, finding an answer on the web is

our problem, not yours. We try to anticipate needs not yet articulated by our global

audience, and meet them with products and services that set new standards. When we

launched Gmail, it had more storage space than any email service available. In retrospect

offering that seems obvious–but that’s because now we have new standards for email

storage. Those are the kinds of changes we seek to make, and we’re always looking for

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new places where we can make a difference. Ultimately, our constant dissatisfaction with

the way things are becomes the driving force behind everything we do.

HR as a strategic partner for business

HR department at any organization has a unique challenge – it has to ensure that the employees are motivated and committed to the organization with complete integrity and honesty. However, at the same time, the HR department has to ensure that the market dynamics are not adversely affected by the sheer volumes of investment involved in theProcess. In some ways, HR department should act as a service provider for the employees, and treat employees as its customer base – treat the employees the same way you would like them to treat their customers, and the whole paradigm of customer satisfaction and delivery becomes easy to adopt and adapt. The business model and strategy of not merely trying, but actually delivering the best solution has been a benchmark of the work culture at Google. The workplaces and office locations all over the world are built over sprawling spaces which provide the employees not only with every possible space for creativity and innovation, but also ensures that the employees’ ideas are duly and uncompromisingly studied, worked on, and acknowledged.

Recruitment and Selection

Recruitment at Google is the first and foremost step in the overall HR processes. With the reputation and promise that Google holds for thousands of technology professionals who want to make Google their second home, more than 1300 Resumes are received each day by Google. Hiring the right people is a key HR philosophy at Google – the median age ofEmployees at Google are 27 years, making it the youngest workforce across the industry. However, the retention rate, and the turnover data at Google proves that the organization has been successfully able to attract, retain, and motivate the most difficult crop of employees – the Y generation cyber‐generation professionals who are prone to changing their affiliations quicker than they change their clothes.

Training and Development

Google employees are offered tremendous opportunities to learn and grow. Professional development opportunities offered to all employees include classes on individual and team presentation skills, content development, business writing, executive speaking, delivering feedback, and management/leadership. Free foreign language lessons, including French, Spanish, Japanese, and Mandarin are also sponsored by Google. Given the prominence of engineers at Google, particular attention is paid to providing unique development opportunities for this group.

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It is mandatory for all employees to undergo T&D sessions for a minimum of 120 hours/year, which is about three times the industry average in North America of 43 hours/year. This shows the amount of effort, time and money that Google invests in its employees to keep them abreast of the professional and technological advancements.

Innovation and creativity

There is a strong culture of innovation and experimentation at Google with engineers encouraged to take 20% of their time to develop new product or service offerings, or to provide enhancements to current offerings. Innovation from inside the firm is the norm for most engineering based software development companies. What is unique at Google is the support provided by the company, the collaboration among engineers working on each others’ projects, and the final set of results that Google is able to achieve with the creativity and expertise of its engineers.

Social Good

Google has the informal corporate motto “Don’t be Evil”, which reminds its employees that commitment to be ethical is part and parcel of being a leader at Google. 99% of the employees indicate18 that, “Management is honest and ethical in its business practices”. The standards of conduct that Google employees adhere to concern internal business practices (respecting each other, protecting confidentiality, protecting Google‘s assets, etc), external relations with customers and partners, and the impact on of Google's work on the larger society.

Compensation Structure

Google stands out as being one of the most sought after and yet one of the most underpaying 20 employers in the industry. However, the HR strategy fits perfectly with the business model and vision at Google – wherein employees are attracted not to the short term monetary returns from work, but rather to the support system that could help them create anything. So the work hives at Google have day care and elder care centers, have spa and hair salons, car wash and oil check facilities, and virtually everything that a technology‐obsessed geek would like to worry least about, in form of an all inclusive liberal benefits package, but the actual take‐out cash component is negligible. The innovative Stock Option system at Google ensures that all employees get compensated competitively thanks to the remarkable equity growth of the company.

So strong is the work culture and employee committed bent upon technology solutions rather than tangible compensation that Google became the first company where the Board of Directors requested for a reduction22 in their salaries and compensation because they felt they were getting paid more money than they needed. All the employees agreed on the sentiment, and in 2005‐06, the employees formally demanded a wage cut themselves. During the same period, the turnover23 was 1.43%.

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BUSINESS MODEL

Today, Google is one of the fastest growing companies worldwide. Within four years

google had a 70-fold increase in sales-the benefit even 209-fold. Google earns 99% of its

sales from selling Ads. The two advertisement systems Adsense and Adwords are each

gaining half of the profits.

BUSINESS DESCRIPTION

Google is one of the leading internet search engines in the world. It specializes in internet

search engines and related advertising services. While the company is largely known for

its search engine, its lesser known services include Froogle (comparison shopping

services), Google images (online image library), Google news (news feeds) and Google

finance (financial news and information).The company operates in the US, the UK and a

large number of other countries. Google offers its services and products free of charge

through Google.com and its 158 other international domains, such as Google.ba,

Google.dm, Google.nr, Google.co.jp and Google.ca. The Google interface is available in

more than 100 languages.

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RESEARCH METHODOLOGY

Research design

As we are considering a secondary research on the title so all the research would be done

through secondary resources most importantly through internet.

Data analysis

Data analysis would be done on the basis of the research design

Data collection

We will use secondary sources of data like internet.

Methodology

1. A secondary research would be done on the internet.

2. Data would be collected for the needed.

3. Data collected is analyzed.

4. Conclusions and Recommendations are made on basis of the analysis made.

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MAJOR PRODUCTS AND SERVICES

Google is a provider of internet search engine services and targeted advertisement

solutions. It owns the leading internet search engine, Google.com.

The company's key products and services include the following:

Google.com:

Google WebSearch

Google Image Search

Google Book Search

Google Scholar

Google Base

Google Finance

Google News

Personalized Homepage and Search

Google Co-op and Custom Search

Google Video and YouTube

Communication, Collaboration and Communities:

Google Docs & Spreadsheets

Google Calendar

Gmail

Google Groups

orkut

Blogger

Downloadable applications:

Google Desktop

Google Pack

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Google Toolbar

Google GEO:

Google Earth

Google Maps

Google Sketchup and Sketchup Pro

Google Checkout

Google Mobile:

Google Maps for Mobile

Blogger for Mobile

Google Gmail, News and Personalized Home for Mobile

Google Labs

Google AdWords

Google AdSense

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REVENUE ANALYSIS

The company recorded revenues of $10,604.9 million during the fiscal year ended

December 2006, an increase of 72.8% over 2005. For the fiscal year 2006, the US, the

company's largest geographic market, accounted for 56.9% of the total revenues.

Google generates revenues primarily through advertising on its websites and third party

websites. The company organizes its operations geographically in three regions: the US

(56.9% of the total revenues during fiscal year 2006), the UK (15.1%) and Rest of the

World (28%).

Revenues by Geography

The US, Google's largest geographical market, accounted for 56.9% of the total revenues

in the fiscal year 2006. Revenues from the US reached $6,030.1 million in 2006, an

increase of 60.5% over 2005. The UK accounted for 15.1% of the total revenues in the

fiscal year 2006. Revenues from the UK reached $1,603.8 million in 2006, an increase of

82.6% over 2005. The company’s revenue growth was primarily attributed to increased

acceptance of advertising programs and direct sales and development efforts. This was

partially offset by a slight decrease in spending in certain advertising verticals.

Rest of the world accounted for 28% of the total revenues in the fiscal year 2006.

Revenues from the rest of the world reached $2,970.9 million in 2006, an increase of

97.6% over 2005. Revenue grew primarily owing to increased acceptance of advertising

programs and direct sales and development efforts. The company’s international revenues

were partially benefited by the weakening of the US dollar.

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HRD followed by its top most competing organization:

MICROSOFT AND YAHOO!

1. Recruitment and selection for attracting the best and the brightest.

2. Taking advantage of market condition3. Employee motivation4. Employee satisfaction and loyalty5. Employee rewards: the option driven engine6. Growth and Acquisition

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SWOT ANALYSIS

Google is a global technology leader focused on improving the ways people connect with

information. It specializes in internet search engines and related advertising services.

While the company is largely known for its search engine, its lesser known services

include Froogle (comparison shopping services), Google Images (online image library),

Google news (news feeds) and Google Finance (financial news and information) among

others. Google is the leading search engine in the world.

Google is now available in 158 domains and more than 100 languages. However, intense

competition from Microsoft and Yahoo could negatively impact its revenue growth.

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Strengths

Strong market position

Google is the leading search engine in the world. The company offers search results in

158 domains and in more than 100 languages. In March 2007, Google sites captured

48.3% of the US search market, gaining 0.2 share points from the previous month.

Yahoo! Sites maintained its second place ranking with 27.5% of US searches, followed

by Microsoft sites (10.9%), Ask Network (5.2%) and Time Warner Network (5%).

Furthermore, strong market position has helped Google become one of the premier

internet brands in the world. According to market research firm Miillward Brown,

Google is the world’s top ranked brand, overtaking Microsoft and some other well-

established brands like General Electric Company, Coca-Cola, Wal-Mart Stores and

IBM. In 2006, BusinessWeek and Interbrand placed Google in the 24th position in their

Top 100 Global Brands ranking. The Google brand was valued at $12,376 million in

2006.

Proprietary technology and technological infrastructure

Google’s key strength is its search engine technology and its technological infrastructure.

The company’s search engine is based on its proprietary PageRank technology, which

ranks web pages and displays the ones most relevant to the search query. Google has

patented its PageRank technology; the patent for which expires in 2017. Furthermore, the

company uses Googlebots, web-crawling robots, to scour the web and build a searchable

index for the Google search engine. The company indexed up to 16 billion web pages in

2006. Google is believed to have the largest searchable index among all search engines.

Through geographically distributed servers and data centers, Google delivers faster

performance to its worldwide user base. Besides Google’s search engine, these servers

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also run other company applications including Gmail, Blogger, and its web-based word

processor. Google’s search engine technology and its sturdy technological infrastructure

provide it with a competitive advantage.

AdWords and AdSense programs

Google generates revenues primarily by delivering online advertising. AdWords and

AdSense programs have enabled the company to generate revenues from its breakthrough

search technology. During 2006, the company partnered with companies like Intuit,

Verizon and AT&T to help it bring more business information online. AdWords is the

company's global advertising program that is widely recognized as the web's most

efficient advertising vehicle. Through AdWords, advertisers are able to present their

advertisements to people who are searching for information related to what the advertiser

has to offer. AdWords is accessible to advertisers in 41 different interface languages.

Recent AdWords advertisers included the likes of Sony, Cisco, Alamo Car Rental,

Ameritrade, Amazon.com, Canon, Disney, General Motors, L.L. Bean, Nordstrom, Sears,

Smith & Hawken, Sprint, Volvo and Xerox. Through Google AdSense program, the

company distributes advertisers' advertisements for display on the web sites of Google

network members. The company's AdSense customers include: USATODAY.com,

ABC.com, Forbes.com and 60% of the comScore Media Metrix top 100 sites, as well as

other specialty content sites. A combination of a powerful, compelling business

proposition in search advertising with an easy to use, self-service delivery model

(through AdWords and AdSense) has enabled the company to establish a customer

relationship with over 160,000 advertisers worldwide. This enables Google to generate

steady advertising revenue growth.

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Weaknesses

Reliance on Google Network members

Google provides advertising, web search and other services to members of its Google

Network, which accounted for 39% of the company revenues in 2006. Some of the

members may compete with Google in one or more areas. Therefore, they may decide in

the future to terminate their agreements with the company. Any decision by Google

Network members to use a competitors or their own web search or advertising services,

would adversely impact the company’s revenues. Google’s agreements with a few of the

largest Google Network members account for a significant portion of revenues derived

from the company’s AdSense program. Advertising and other fees generated from AOL,

a Google Network member, primarily through AdSense program, accounted for

approximately 7% of its revenues in 2006. Also, Google derives tangible and intangible

benefits from some of its key members who operate high-profile web sites. If any of these

key relationships is terminated or not renewed the company’s business could be

negatively affected.

Weak presence in social networking domain

Google’s social networking site, Orkut, has lagged behind its competitors such as

MySpace.com and Facebook.com. Orkut currently does not include blogging or advanced

video features compared to MySpace which allows members to post their blogs. When

Google’s Blogger was launched in 2003, it was the web’s top blog-publishing tool.

However, in 2006, MySpace surpassed Blogger as the top social networking site in the

US. In May 2006, Blogger had 20 million unique visitors, up 67% from May 2005. In

contrast, MySpace drew 42 million unique visitors in May, up 329% from May 2005.

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There has been a tremendous growth in popularity for social networking sites such as

MySpace, Friendster and Facebook. Even Google’s competitors Yahoo and Microsoft

have begun to organize their applications around social networking. Google’s weaker

presence in this domain could translate to lost ad revenues.

Lack of product integration

Google has focused more on launching new products in recent years and less on

integrating products those products into a whole for delivering a holistic experience to the

user. As a result, the company now has a large number of new products, some of them

innovative, but seemingly having little in common with each other. Product integration

allows internet companies to steer visitors from one service to another and retain them on

their site for a longer time. Product integration also enables internet companies to gain

acceptance for new products quickly.

In 2005, Google introduced a large number of offerings including Google Desktop,

Google Earth and Google Base. There are currently 50 products at various stages of

development and most of which are available across Google's websites. Furthermore,

there have been numerous instances where users have been unaware of its new products

because they are embedded so deeply within Google's sites. The fact that some users have

had to use the Google search engine to find new products highlights the lack of

integration between its new products. Rival Yahoo, by contrast, has built better linkages

between its various products. Lack of product integration puts Google at a competitive

disadvantage against more integrated rivals such as Yahoo.

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Opportunities

Growth in internet usage

Globally, 16.9% of the population uses the internet. North America has the highest

penetration rate of 69.5%, followed by Oceania/Australia (54.5%) and Europe (39.8%) in

June 2007. Internet usage has grown rapidly over the last few years, doubling over the

period 2000 to 2007. Africa recorded the highest growth of 643.1%, followed by the

Latin America/Caribbean (508.6%) and Middle East (494.8%). This high growth rate of

internet usage in Asia and other emerging markets provides a huge opportunity for

Google. China, the world's second-largest internet market after the US, provides plenty of

opportunities to grow for companies such as Google. While there are more than 130

million Chinese online, that only accounts for 10% of the country's population. In

contrast, about 60% to 70% of the population in the US, Japan and South Korea use the

internet. In response, Google announced in April 2007 that it was giving its local

managers more autonomy to develop new products and respond to the local market.

Furthermore, the company is increasing its investment in China in an effort to make up

for its late entry in the country. Google's share of search market revenues in China

improved from 13% in the first quarter of 2006 to 19% in the first three months of 2007.

Expanding its presence in China would enable Google to strengthen its leadership

position.

Online ad spending in the US

Internet format advertising is expected to continue to attract significant investment.

Online ad spending is forecasted to reach $20 billion in 2007. This figure represents an

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increase of 19% compared to 2006 figures. Online video is expected to display the fastest

rate of growth, increasing 89% over 2005, while $8.3 billion will be spent on paid search

ads in 2007 - up $1.3 billion on the previous year. Google generates revenue primarily by

delivering relevant, cost-effective online advertising. Online advertising accounted for

98.9% of the company’s total revenues in fiscal 2006. In April 2007, Goggle entered into

an agreement to acquire Double Click, a provider of digital marketing technologies and

services. Google’s acquisition of Double Click would strengthen its advertising network

by expanding its access to publisher inventory and enabling the company to reach a

broader set of advertisers and ad agencies. The growth rate of online ad spending would

directly impact the revenue growth of the company. Faster growth rate in online ad

spending would have a positive impact on the financial performance of the company.

Growth in online video

Online content aggregators such as AOL, Google, Yahoo!, MSN and Apple are defining

the future of television. The worldwide market for online content services is expected to

expand by a factor of 10, growing from about 13 million households during 2005 to over

131 million households by 2010. Increased demand for online video is in part attributed

to the growth in broadband adoption, which is expected to more than double by 2010.

High-speed internet-connected households are expected to grow from 194 million in

2005 to 413 million by 2010. Google acquired YouTube in 2006 to capture this growing

online video market. YouTube has entered more than 1,000 partnership deals with

content providers looking to participate in this growing creative community - including

Universal Music Group, CBS, BBC, Sony Music, Warner Music, the NBA and The

Sundance Channel.

Google’s revenue-generating opportunities would grow with the acquisition of YouTube

as it offers online video services.

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Threats

Competition from Microsoft and Yahoo

Google faces competition from companies that seek to connect people with information

on the web and provide them with relevant advertising. Google competes with internet

advertising companies, particularly in the areas of pay-for-performance and keyword-

targeted internet advertising. Google also competes with companies that sell products and

services online. It also faces competition from companies offering traditional media

advertising. Microsoft and Yahoo! are its key competitors. Microsoft has developed

features that make web search a more integrated part of its Windows operating system

and other desktop software products. If any of its competitors provide similar or better

web search results, more relevant advertisements or make their web search or advertiser

services easier to access, the company could experience a significant decline in user

traffic or in the size of the Google Network. Any such decline could negatively impact its

revenue.

Click fraud and invalid clicks

The company has regularly refunded fees that its advertisers have paid, but were later

attributed to click fraud and other invalid clicks. Invalid clicks are clicks which are not

intended by the user to link to the underlying content such as inadvertent clicks on the

same ad twice and clicks resulting from click fraud. Click fraud occurs when a user

intentionally clicks on a Google AdWords ad displayed on a website for a reason other

than to view the underlying content. This would negatively affect the company's

profitability. These invalid clicks could also negatively impact the Google brand. At the

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same time, invalid clicks could result in reduced return on investment for Google's

advertisers because the invalid clicks will not lead to potential revenue. Click fraud

would result in dissatisfied advertisers and even loss of advertisers, which would

adversely affect revenue growth of the company.

Data scam

There has been an increase in data scams to capture private information used to access

online accounts for banks. Recently, a data scam was discovered by security software

firm Exploit Prevention Labs in New Kingston, which involved a scam by online hackers

to fool Google searchers into clicking through another site. The data scam targeted the

top sponsored links tied to Google search results. A program was installed on victims'

computers to capture private information used to access online accounts for 100 different

banks. The hackers created their own web site and outbid legitimate businesses in

Google's AdWords program to secure prime placement of ads linked to popular search

terms. Users who clicked on those ads were then routed to the trapped site before being

sent on to the legitimate destination.

Google seized paid advertisements linked to about 20 search terms that online hackers

had hijacked to steal banking and other personal information from web surfers looking

for the Better Business Bureau and other sites. Google dismantled the offending links and

shut down the problem AdWords accounts. The company is working with advertisers to

identify any other malware-loaded sites that might be on the network. Occurrence of such

scams would reduce the usage of Google by users and could adversely affect its revenues.

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TOP COMPETITORS

The following companies are the major competitors of Google Inc.

Microsoft Corporation

Yahoo! Inc.

Time Warner Inc.

IAC Search and Media

LookSmart, Ltd.

NetEase.com, Inc.

SINA Corporation

Baidu.com

Sohu.com Inc

eBay Inc.

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REFERENCES

www.masterplanthemovie.com

www.google.com

http://en.wikipedia.org

http://search.ebscohost.com

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